In my view, electronic #payments will accelerate dramatically over the next decade, driven by the “#atomization of payments.” New business models are emerging, enabled by #technology, resulting in increased transactions that will scale and scale. We are fast moving from batch to real-time transactions, with payments made continuously from bank accounts.

Examples may include shopping: in-aisle buying with an instant payment for every item picked off the shelf; self-driving cars, where ownership will diminish, replaced by on-demand rides, and payment for every journey; salaries, typically paid monthly to be paid daily, even hourly; company dividends paid daily (already evident in the BnkToTheFuture investment platform); smart meters will pay electricity daily and so on.

Benefits to expect from this transformation

The benefits will be broad: new products and services, improved cash flows, financial efficiency, improved certainty for businesses and individuals, better fraud prevention, reduced or eliminated reconciliations and errors. Changes will be driven by technology and new business models, and will be pervasive and profound. For example, payroll, billing systems and processes will be very different, and often unnecessary, and personal and business cash management will be largely automated.

Quantifying the impact of atomization

While it will take years for payments to atomize fully, let’s put some figures to quantify the impact using the UK as an example.

The UK has 19 million households. Assuming they buy 50 items a week (mainly groceries), which translates to 49 billion payments and items purchased. The UK has 37 million vehicles. Let’s assume each averages 10 trips per week—which is 19 billion annual trips and payments. Around 31 million people are employed in the UK—adjusting this for #part-time workers, daily salary payments would amount to 7 billion payments annually. About 10 million people own UK shares, assuming they average 5 shares each—which is potentially 18 billion daily dividend payments annually. Finally, if the 19m UK households have smart meters making daily electricity payments, that is 7bn payments annually.

So, with some very basic analysis, we have identified around 100 billion future UK payments, and have barely scratched the surface. Add in other utilities, daily mortgage and other interest payments, on-demand music, phone calls, TV/video, media and new business models that are yet to be invented, and it is easy to see UK payments reaching up to one trillion transactions per year in the future, and multiplying by relative GDP factors, seven trillion in the US, six trillion in Europe and 30 trillion globally.

There are currently about 38 billion payments in the UK (including cash, cards and electronic) according to Payments UK (now part of UK Finance), so payment volume in the UK could rise 25 times or more.

When this will happen is anyone’s guess—10 years? 20 years? 40 years? But we need to plan for it!

In part two I will explain a precedent for this atomization and its implications, and what the payments industry needs to do.

Raising #capital is a crucial step for any startup trying to build its way up the #fintech ladder. However, when it comes to VC funding, the actual capital is the “least #important#part of the transaction,” according to Bruce Wallace, chief digital officer at Silicon Valley Bank. “I think there is a real misunderstanding sometimes [&#8230;]Bank Innovation

This is the second #part of my article about #blockchain#consortiums, focusing on the #enterprise market. In Part 1, I covered Linux Foundation’s HyperLedger Project, which acts as an umbrella for Fabric, Intel Sawtooth Lake, and Iroha. I also touched on R3’s Corda, and Digital Asset Holdings&#8217; offerings. Learn more here. In this part, I will cover the following three [&#8230;]Bank Innovation

Blockchain-based Enigma system

Researchers from the Massachusetts Institute of #Technology, therefore, have developed a guaranteed privacy system based on #blockchain, in which #data can be stored, verified and shared without ever being revealed to any of the network’s parties. ‘Enigma’, which is powered by the blockchain, is essentially “different computers that are talking to each other, but they don&#8217;t do mining, they just provide resources to the network, bandwidth, some of their hard drives, some of their CPU power&#8221;, according to co-founder Oz Nathan, a technology entrepreneur with experience working with the Counter Terror Unit of the Israeli Defence Forces. This will purportedly allow #banks, for instance, to confidently sign up to private blockchains, knowing that sensitive #client data will remain private.

Enigma’s founders are also speaking to medical companies, particularly those who are unable to put huge swathes of client medical #information onto the blockchain. As a solution, Enigma breaks down data into smaller pieces, and rather than performing conventional encryption, a “secret sharing” method is used, according to co-founder Guy Zyskind where the system “guarantees mathematically that each of these pieces are completely masked, completely random and completely #secure&8221;.

Blockchain is to prevent industrial data breaches

Moreover, there does not appear to be a limitation to the magnitude of projects that can be put onto the blockchain. The UK government is now looking to blockchain technology to protect itself against data breaches within some of its biggest industries. Guardtime, which provides cyber-security services and uses blockchain to secure sensitive data, recently announced it will be in charge of protecting the UK’s nuclear power stations, flood defence systems and electricity grids from cyberattacks.

According to a recent report by think tank Chatham House, a ‘culture of denial’ currently exists in the UK’s nuclear power industry with regards to the risk of cyberattacks. Blockchain’s permitted ledger, however, can be used by Guardtime to boost the security of some of the largest systems of UK infrastructure. The system uses hash-function cryptography that is based on ‘signature’ authorization, known as Keyless Signature Infrastructure (KSI). Ultimately, the technology allows all data across the system to be securely authorized, while allowing for independent verification of the records, without the need for centralized authorities.

Although blockchain’s technology has been synonymous with the rise of #Bitcoin, Guardtime has been using similar technology for the purpose of security prior to Bitcoin’s emergence. The company employs cybersecurity experts who have experience in the US military, as well as state-level digital security experts from Estonia, who resolutely defended the country from a comprehensive cyberattack by Russia in 2007. Indeed, Estonian innovations in addressing confidentiality and data integrity have been deemed by the US as cutting-edge, which has in turn led to the formation of the #FinTech partnership.

Defence systems, telecommunications companies and financial-services firms are all looking at the technology, according to CTO Matt Johnson, who also believes that Guardtime&8217;s permitted blockchain can provide proof of time, identity and authenticity, while preserving confidentiality of the data, on an industrial scale.

Blockchain application in financial data and compliance

Blockchain makes the top secured financial transactions controllable

The financial services industry is another major area in which #client#information must be securely protected to prevent market manipulation. At the same time, however, compliance divisions must be aware of the identity of trading counterparties in order to mitigate potential money-laundering activity. As such, a system which balances both compliance requirements and trading anonymity is required.

Indeed, regulators may find the anonymity of #blockchain a challenge to wholly approve, as it makes it difficult for them to conduct their ‘know your customer’ (KYC) checks to prevent money laundering. Blockchain’s close association with #Bitcoin, moreover, hasn’t helped matters, especially as the #cryptocurrency has been notoriously used in criminal activity, and even funding for terrorist activity.

Blockchain offers solutions to AML

In November, Israeli start-up Polycoin showcased its blockchain-based compliance service, which will provide a verification system for financial transactions. This will help compliance officers to handle their anti-money laundering (AML) and KYC requirements. Polycoin’s platform scrutinizes financial transactions to try and identify who they are from, and they are then placed into a ranking system. Those transactions deemed as being suspicious – such as an AML breach &#8211; will be identified by Polycoin’s platform, which will then send an alert to compliance for further investigation.

Polycoin CEO Alfred Shaffir thinks his firm can provide a complete solution for blockchain compliance, and considers Polycoin’s innovations could have as profound an impact as digital financial crime prevention tool ‘NICE Actimize’ had in the late 1990s. As such, Shaffir is of the opinion that for any bank working with blockchain, transformation of compliance systems and procedures will be their first priority.

Indeed, #banks have already responded positively to Polycoin’s proposals, with the start-up participating in the innovation accelerator project in Israel conducted by financial services giant Citi, while also being chosen as one of 10 participants out of 170 applicants for Finnish bank Nordea’s accelerator in Helsinki. Shaffir has stated that Polycoin has received much interest from those banks that are interested in integrating blockchain into their businesses in the future.

Blockchain compliance specialist Tradle is simplifying the KYC process even further. Last August saw London’s Startupbootcamp #FinTech accelerator take place, where Tradle CEO Gene Vayngrib explained how blockchain #technology could ease the costly pain of compliance for banks. The company is creating a user-friendly smartphone interface that will allow documentation to be sent electronically, thus eliminating the need for inefficient paper-based communication. Furthermore, within each bank currently, separate KYC checks are conducted across products, divisions, locations and subsidiaries &8211; this lack of sharing elevates KYC costs unnecessarily.

Vayngrib instead proposes a blockchain-based app called Trust in Motion which stores KYC #data on a permitted ledger and which all authorized parties can access when required. He calls it the Instagram for KYC, as clients can snap a picture of their ID documents (their passport, for example) and send it directly to the bank. Once the compliance officer verifies the pictures using authentication processes, the documents are digitally signed and put onto the blockchain which, assuming the appropriate authorizations have been granted, can be co-managed by the bank and the client for updates and reverifications.

Blockchain automates AML procedures

The technology could also be extended to include AML rules, whereby instead of having to prove to regulators that AML checks have been conducted by sending them mounds of data, automatic procedures can be established that perform AML duties such as the reporting of suspicious transactions. According to Vayngrib, the blockchain method wholly preserves the privacy of the data, while the regulator “could get information about suspicious transactions without banks sharing a lot of raw, private data with them”.

While regulators will like the fact that blockchain’s verification process involves a network of users providing authentication and security, bankers on the other hand will not like this lack of privacy, particularly when it comes to sensitive trading data. Furthermore, financial institutions (and other companies) have suffered numerous data breaches in recent years that have cost them dearly.

Even if several banks are operating on a shared private ledger (with only a limited number of network users), each bank will still want to keep data from every other user in the network. Banks are extremely secretive about the business they transact, as well as the clients with whom they conduct business, meaning that this information can’t be disclosed to competitors, even on a private blockchain.